Harman Kardon 2008 Annual Report Download - page 46

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Genesis launch and we began producing infotainment systems for SsangYong during the year. Audio
system sales to Toyota were higher than last year and we had increased shipments of Mark Levinson
premium audio systems to Lexus. Additionally, we began a new relationship with Subaru late in fiscal
2008 providing the automaker with acoustic systems. Excluding foreign currency translation, sales in
Europe were higher due to increased shipments of infotainment systems to Audi for the new A4 and A5
models. We also had higher sales to BMW supporting several mid-level platforms. These sales increases
were partially offset by lower sales to Mercedes due to reduced E-Class production and price reductions.
Aftermarket sales of PNDs in fiscal 2008 were also lower than the prior year and may continue to decline
as a result of our decision to focus exclusively on the automotive aftermarket premium sector.
In fiscal 2007, Automotive net sales increased 11 percent compared to fiscal 2006. Foreign currency
translation contributed approximately $122 million to the net sales increase compared to the prior year.
The growth in net sales was primarily due to higher shipments of audio systems to Lexus for the LS460
and to Toyota for the Camry. We also had higher sales of infotainment system to Audi due to a full year
of production of the Q7 platform. Infotainment system sales to Daimler were higher than the prior year
due primarily to supplying the Mercedes-Benz GL Class. Automotive reported lower sales to BMW,
Landrover, Renault, Porsche and PSA Peugeot Citroën compared to the prior year. Sales of aftermarket
products, particularly PNDs, were very strong during fiscal 2007.
Consumer – Consumer net sales increased 7 percent in fiscal 2008 compared to last year. Foreign
currency translation contributed approximately $33 million to the net sales increase compared to the prior
year. Sales were adversely affected by general economic weakness in North America and Europe. We
also experienced significant competition in North America across multiple product categories including
multimedia, which contributed to lower sales of iPod docking stations. In Europe, sales excluding foreign
currency translation were higher than last year due to the popularity of certain Harman/Kardon electronic
systems and increased sales of multimedia products.
Consumer net sales were 1 percent higher in fiscal 2007 compared to the prior year. Consumer reported
higher multimedia sales in Europe, partially offset by lower multimedia sales in the United States.
Multimedia products include popular accessories for the iPod such as the JBL OnStage and OnTime.
Sales in the United States were adversely affected by substantial competition in this market. Sales of
Harman/Kardon home electronic products were also higher in Europe but lower in the United States.
Sales of traditional home loudspeakers were lower in both Europe and the United States. The decrease in
U.S. sales was primarily due to our decision to exit distribution through a major North American retailer.
Professional – Professional net sales were 9 percent higher than fiscal 2007. Foreign currency translation
contributed approximately $13 million to the net sales increase compared to the prior year. Sales growth
was supported by an increasing number of HiQnet enabled products that provide audio professionals with
a centralized point to monitor and control complex audio systems. JBL Pro had strong sales of products
supporting the install, portable and tour sound markets. Harman Music Group had higher sales due to
new product introductions. AKG sales of headphones and microphones were higher than year.
Additionally, sales of Soundcraft and Studer mixing consoles were above last year, reflecting successful
new product introductions.